December 19th, 2014 13:15:39 GMT.

Time to rock and roll with Canadian CPI and retail sales

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At the bottom of the hour we have Canadian inflation data for November. On the month it’s expected to fall by 0.2% from +0.1% and to 2.2% vs 2.45 prior y/y. Given the current environment of falling energy prices those drops might be a little conservative but it is November data so there may still be lagging effects not yet in play.

The expectations for the core go against the grain with estimates of a 2.4% gain y/y from 2.3% in October. On the month we’re looking for a drop of 0.1% vs 0.3% prior.

Also out are October retail sales (they’re so far behind the curve this lot) which look to be coming in at an uninspiring -0.2% m/m following a 0.8% jump last time. Ex-autos is looking like 0.2% vs flat in September.

USD/CAD has had several attempts at clearing the 61.8 fib of the 2009 fall at 1.1665 and has dropped back to under 1.16.

USD/CAD H4 chart 19 12 2014

USD/CAD H4 chart 19 12 2014

The loonie has settled somewhat after the drive by oil and it remains to be seen whether the market has the interest for another crack at the topside. If inflation does fall more than forecast the market will probably just see that as par for the course given the price risk environment we’re in. If it pops higher again then we could see a half decent downside move if the market has the gumption for it. This is one pair I’m looking at shorting on the inflation picture forcing the BOC into hiking action and possibly ahead of the Fed.

 

2014-12-19T13:15:39+0000

December 19th, 2014 12:54:16 GMT.

EUR/USD stages a bounce from just above 2010 support

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Back to work Ryan, it’s not clocking off time yet.

The euro has bounced after a having a look at the support around 1.2224/40 (June 2010 support line and 200 mma)

EUR/USD Daily chart 19 12 2014

EUR/USD Daily chart 19 12 2014

We’re back up to 1.2280 in fairly lacklustre trading and that’s partly been helped by EUR/GBP holding support at 0.7830, and just ahead of its own long term support level. 1.2290 is the nearest resistance ahead of 1.2300

EUR/GBP Daily chart 19 12 2014

EUR/GBP Daily chart 19 12 2014

It’s very unlikely that we see any real push to break the current ranges but there might be some squaring off during the US session as a lot of people will be packing up today for the holidays. When I worked in the big smoke, usually by this time I’d be in the pub topping up from one Christmas party or another with absolutely no will to do any work. How times have changed. Now it’s home alone with a fridge full of Peroni’s calling my name. Fear not, I’ll resist for at least a few more hours ;-)

The only biggish event left on the calendar is Canadian CPI, one of my favourite numbers at the moment, as it keeps blowing BOC’s Stephen Poloz out of the water. I’ll have a look at USD/CAD and see if there’s anything good to watch.

2014-12-19T12:54:16+0000

December 19th, 2014 11:48:39 GMT.

The Oyly Bird Snatches a Turn

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As a Christmas treat to folks in the ForexLive universe, our very own Lilac has put together an awesome post on the current ins and outs of the oil market. Next year we hope to increase reader interaction and Guest Trader will be coming back into a regular slot and Lilac’s post is a little taste of what to expect.

Who knew what the year would bring as 2014 unfolded with oil prices trading above $100?

The effects of six months of plummeting prices are not only damaging to Russia, but also Iran – two economies sitting on opposite sides of the argument for cutting production in the face of a 2 million bpd crude glut that has built up in the market – and two of the most poorly managed economies in the world. That is, aside from oil.

One hoped for upside to this however, is that conflicts emanating from Russia may be resolved all the sooner. And certainly the problems Iran faces after years of crippling sanctions should render it more malleable while the stakes still remain high in Tehran’s nuclear programme discussions.

With Russia dominating the headlines so much it’s probably worth repeating that, before the November OPEC talks it had been mooted that Russia – the world’s 2nd largest oil exporter – would agree to curbing its oil production by around 300,000 bpd from next year in return for OPEC limiting its output by another 1.4 million bpd. Bearing in mind that Moscow’s relations with OPEC have long ago been soured, not only due to Putin’s close ties to the Syrian regime, but by his country’s pledge to cut output in tandem with the group in the early 2000s – when Russia failed to follow through, and instead increased exports – it was an unlikely scenario then, given that Russian oil output has risen to a near post-Soviet record of 10.61 million bpd since September. In the event of course, talks to cut output failed, because Russia refused to cut.

One explanation is that Moscow can’t easily turn off the tap in Siberian oilfields, where it’s difficult to shut down wells during winter, unlike Saudi Arabia, which has the ability to react quickly. What’s more, the Kremlin has been somewhat cushioned from the price decline by the sharp fall in the value of the ruble. Even though the dollar value of its oil exports has fallen, their value in rubles has remained relatively steady, so the government can still collect enough oil taxes to cover pensions and other budget obligations.
And Rosneft’s Sechin reckons that Russian oil companies are accustomed to dealing with sharp price fluctuations – even below $60, it isn’t so dramatic for them that it would require immediate production cuts.
The main reason for Russia’s reluctance, though, is that it really can’t afford to sell less oil.
Oil exports are the country’s key source of hard currency, particularly as Western sanctions have significantly limited Russia’s access to global capital markets. And Russian oil companies need to keep that money coming in, as it becomes more expensive to extract oil from dwindling reserves in their main Western Siberian oilfields, where in fact enhanced techniques are necessary even to keep production flat, let alone increase it.
Thus while Russian oil production might dip slightly if lower prices make some marginal wells uneconomical, Russia will not be deterred from keeping the spigots wide open. Neither, I suspect, will the US, given that it’s in the fast lane to overtake Russia … which is why Ryan nailed it when he wrote [of Saudi oil minister Ali bin Ibrahim Al-Naimi ] “he’s made a good point though, why should OPEC cut just because non-OPEC production has risen? That’s what makes a market.”
The ten large oil producing and exporting countries combined account for 6.5% of global GDP.
And of the ten largest oil importing countries, the EU, US, China and Japan account for 65% of global GDP.
So in bare terms, the numbers speak for themselves.
At current prices, between $300-400 billion annually which would otherwise have been spent on energy can now be released to purchase other goods and services – without a reduction in access to energy – therefore clearly a boost to growth.
If current prices persist for the next six months, this would account for an increase in growth in a range of 1/2 to 3/4% across Europe, US, Japan, China and Latin America. Passing on the benefits leads to more competition, if we consider that 70% of cheaper oil prices can be passed on to the consumer.
No doubt climate policy will be used as an excuse to soak up the benefits, and while there are many alternative energy sources including shale, tar sands and deepwater exploration, these are expensive ways to extract oil, and considerably less viable if oil remains below $70.
As has already been suggested, the Saudis can move the price – a deliberate ploy then to reduce such investment – but they would still be in a position to maintain market share at around $60-70. It could also be said, however, that the Saudis will have done more for worldwide consumer recovery than any amount of QE has ever done, by putting money into pockets to drive growth – far more than Bernanke ever did. But when $100 was tolerable barely six months ago, how long will it be before governments levy more taxes in order to fund budget deficits?
Something though that not too much has been made of yet is the effect of, say, another six months of sustained low prices.
As revenues to OPEC nations would normally be recycled back into European and US stocks and bonds, the ensuing decline in foreign demand as such will likely take the edge off the boom – and give a bit of a nudge to US interest rates.
And on that note, I’ll leave you with the old classic … Oil be home for Christmas ;)

2014-12-19T11:48:39+0000
2014-12-19T11:21:14+0000

December 19th, 2014 11:10:50 GMT.

ForexLive Christmas shopping hours

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After an exhilarating and eventful 2014, including our take-over of this wonderful site, the ForexLive team is going to use the festive period to put some further developments in place, ready for a fresh look/feel sometime in Jan

As of Monday 22nd Dec we will run a “week-end” service where we will pop by and update on major price moves and headlines and throw up a few thoughts on 2014 and what might lay ahead next year. We will return in full on Friday 2nd Jan.

We plan to run a few interactive posts in that period so there will be plenty of chance for the community to share trading and festive thoughts, and help us to help you by completing a survey, that we’re currently compiling, so that we can serve you better next year. If there’s anything in particular that you would like us to feature over the holiday period then do let us know, and if any of you want to submit an article for posting then do let us have it at info@forexlive.com

We’ve compiled a ForexLive review of 2014 which will be published in the next few days, and we’ll also have for you the orderboard/option expiries trading guide which we’ve completed and had on the back burner.

2014 has been an exciting time for us and the markets and, we hope, for all of you. We are even more excited about bringing you a new and more user-friendly site ( couldn’t be much worse eh?!) in 2015. Your patience, support, and loyalty have been immense for which we thank-you from the bottom of our humble hearts and clapped-out typing fingers

We’ll be offering our various individual festive greetings over the next few days but for the moment we wish you a fantastic holiday season and a wonderful New Year.

Thank-you again

2014-12-19T11:10:50+0000

December 19th, 2014 11:00:04 GMT.

December 2014 UK CBI distributive trades 61 vs 30 exp

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  • Prior 27
  • 3m/3m sales 40 vs 30 prior
  • Orders 24 vs 4 prior
  • Time of year sales 16 vs -2 prior
  • Stocks vs demand 30 vs 46 prio

A great read for the retail and wholesale sector and follows yesterday’s spiffing retail sales numbers. Black Friday sales was a big driver for retail yesterday and that’s probably a big chunk of that in these numbers.

Still, it;s at the highest since August 1988 so something’s going right.

UK CBI distributive trades 19 12 2014

UK CBI distributive trades 19 12 2014

2014-12-19T11:00:04+0000

December 19th, 2014 10:00:51 GMT.

Japan’s Amari says economy recovering steadily thanks to Abenomics

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I guess he would say that eh ?

  • virtuous cycle beginning in Japan

Econ min Amari keeping his boss happy by saying the right things to Bloomberg

  • Japan won’t drop commitment to fiscal consolidation
  • Japan will keep to FY 2020 fiscal consolidation target

USDJPY 119.37 after failing at 119.50 again

Amari- Did I do good Boss ?

Amari- Did I do good Boss ?

2014-12-19T10:00:51+0000
2014-12-19T10:00:03+0000

December 19th, 2014 09:54:34 GMT.

More from the orderboard 19 Dec

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USDCHF currently 0.9803 finding some support into 0.9780 but offers from 0.9820 into yesterday’s highs

Sellers  0.9820 0.9845-50 0.9880 0.9900-10

Buyers 0.9780 0.9760 0.9740 0.9700-10 0.9680 0.9650-60

 

EURCHF currently 1.2035 failing again to hold above 1.2050

Sellers 1.2050 1.2065 1.2085 1.2100-05 (stops above) 1.2125-35 1.2150

Buyers 1.2030 1.2015-20 1.2000-05 (SNB cap- stops below 1.1990) 1.1970 1.1950

 

USDCAD currently 1.1595 testing bids after failing to hold above 1.1600 so far

Sellers 1.1625-30 1.1650 1.1680 1.1700 1.1735 1.1750

Buyers  1.1565-75 1.1550 1.1520 1.1500 1.1470-75 1.1450

 

NZDUSD currently 0.7766 unable to breach 0.7800 still

Sellers  0.7800-05 0.7830 0.7850 0.7885 0.7900

Buyers 0.7750  0.7700 0.7680 0.7650

2014-12-19T09:54:34+0000

December 19th, 2014 09:30:09 GMT.

November 2014 UK PSNB 13.414bn vs 15.050bn exp m/m

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  • Prior 7.055bn. Revised to 6.429bn
  • Ex- banks 14.065bn vs 15.000bn exp. Prior 7.706bn. Revised to 7.080bn
  • Ex-financials 14.9bn vs 4.4bn prior. Revised to 3.8bn
  • PSNCR 6.698bn vs -2.592bn prior. Revised to -2.775bn

Fining the naughty banks helped finances by 1.1bn and there was a nice little jump in tax receipts. Income tax rose 2.9% y/y vs 1.5% in Oct. Overall borrowing for this financial year so far (ex-banks) was down 0.6% on 2013.

With Osborne already saying that he’ll miss his budget deficit target for 2014/15, and has set the new one 6% higher, with numbers like this he still has his work cut out on the new target. Expect this area to come into play next year when the election bandwagon gets rolling.

UK PSNB details 19 12 2014

UK PSNB details 19 12 2014

UK PSNB 19 12 2014

UK PSNB 19 12 2014

 

 

 

2014-12-19T09:30:09+0000
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